GAO: HUD should re-open HITS contract again

The Government Accountability Office today recommended that the Housing and Urban Affairs Department once again re-open the competiton for the $750 million HITS contract?a contract HUD has twice awarded to EDS Corp.


If HUD follows the recommendation, it will be the third time the agency has solicited bids for the Information Technology Systems contract.


GAO faulted HUD for holding more "meaningful discussions" with EDS than it did with Lockheed Martin Corp.


Earlier in the day, GAO approved Lockheed Martin's protest of the second contract award of the HUD HITS contract to EDS. GAO this afternoon decided to share some of its findings and recommendations with EDS and Lockheed Martin.


"The basis for sustaining in the broadest terms are improprieties relating to the conduct of discussions in that the agency had post-final proposal revision discussions with EDS and, second, that they failed to have meaningful discussions with Lockheed," said Daniel Gordon, GAO associate general counsel and head of bid protest unit.


"GAO recommends that the agency re-open the acquisition and engage in meaningful discussions with other offerers, obtain and evaluate revised proposals and make a new source selection decision," Gordon said.


HUD officials said they were reviewing the decision.

This marks the second time GAO has ruled against HUD's attempt to award the $750 million Information Technology Systems contract to EDS of Plano, Texas.


"We are very happy that they upheld our position regarding the contract and we look forward to working with HUD and GAO," said Lockheed Martin spokeswoman Nettie Johnson.


Incumbent contractor Lockheed Martin filed a protest with GAO in August after HUD re-awarded the HITS contract to EDS. That contract was the result of a recompetition prompted by Lockheed's protest of the original award, which GAO ruled had not been adequately justified by HUD.


Lockheed Martin of Bethesda, Md., said in August it appealed HUD's second award to EDS based on the agency's "unreasonable evaluation findings, the agency's failure to provide meaningful pre-award discussions and its failure to negate improper advantages EDS gained during transition activities conducted under the first, improperly-awarded contract."


Under the contract, EDS was to furnish personnel, hardware and software, telecommunications, facilities and services needed to deliver HUD's basic IT functions at more than 80 offices nationwide.


During the past year, EDS had assumed responsibility for HUD's nationwide help desk and field support services for 80 offices. The contractor also transferred HUD's application development platform programs and processes, and the agency's disaster recovery facility, to the EDS data center in Charleston, W.Va.


"Today's decision by the GAO does not mean that Lockheed Martin has won the contract or has a better solution," said EDS spokesman Kevin Clarke. "We continue to believe that ours is the best solution for HUD."


The contract has a base period of four months, followed by nine option years with a total potential contract value of $750 million.


"We have not seen the GAO decision, but we anticipate that GAO will recommend that HUD take corrective action," Clarke said. "If HUD follows such a recommendation, EDS will vigorously work to secure this business. Our solution was deemed the best on two previous occasions and we are confident that we will prevail."


Lockheed Martin had been the incumbent IT provider since 1990 under the HUD Integrated Information Processing Service contract.